Punjab farmers hop banks to avoid loan repayment

Vijay C Roy
Tribune News Service
Chandigarh, November 14

Banks are left high and dry even after robust income of cultivators on the backdrop of bumper paddy season this year as the farmers are consciously depositing their income in another accounts and avoiding the lending banks.

Bankers suspect the intent of the farmers and fear a further spike in non-performing assets (NPAs). Since September 2017, the NPAs of various banks under agriculture sector have increased to Rs 8,319 crore in Punjab. The state has 7,175 branches of commercial, cooperative and regional rural banks.

The government agencies and private millers in Punjab have already procured over 150 lakh metric tonnes of paddy and most of the payments have been made to the farmers within 72 hours of procurement.

Ideally, they should have deposited their money in the bank branches that had extended crop loans to them. But, they are concealing their income from the lenders, apparently not to repay the debt and later reap the benefit of debt waiver in an election year, said bankers, who were in Chandigarh to attend the 146th meeting of the state-level bankers committee for Punjab.

The farmers do not want to deposit their income in the account of the lending banks as they fears that their money will be immediately adjusted by the banker against principal and interest. They also expect a loan waiver ahead of the 2019 General Election, bankers said.

Due to announcement of debt waiver for small and marginal farmers up to Rs 2 lakh, the farmers in the state have stopped making repayments, which has adversely affected the recovery scenario and triggered the NPAs, they said.

“Banks must coordinate with each other to ensure that farmers deposit sale proceeds of the crop in their loan account or in the accounts of their respective Kisan credit cards so that the recovery can take place and NPA-level is reduced,” PNB General Manager PK Anand said. 

Some bankers, however, pointed out a practical issue in Anand’s suggestion. “Why a bank receiving business will disclose accounts’ details to the other bank,” said a banker requesting anonymity.

Bankers are planning to take up the matter with the state government. Punjab had notified a debt-waiver scheme for the small and marginal farmers up to Rs 2 lakh on October 10 last year. The bankers blame the state government for not implementing the scheme efficiently and hence it is creating a bad credit culture.

The agriculture sector NPA is around Rs 8,952 crore, which is 11.20% of total agriculture advances as of September 30, 2018 compared to 7.19% during the corresponding period previous year. As of September 2017, the total NPAs under agriculture loans was Rs 633 crore. The NPAs increased by over Rs 8,319 crore during the past one year to cross Rs 8,952 crore on September 30, 2018.